How to choose an online broker

Choosing a stockbroker is one of the first meaningful decisions an investor makes. It shapes how you interact with markets, how easily you can build a portfolio, how much friction you experience along the way, and how much of your eventual return you keep. The choice used to be simple: you opened an account with your bank or relied on a full-service adviser. Today, however, Australia offers a spectrum of online brokers, each positioning itself differently. That abundance of choice is empowering, but it also places more responsibility on the investor to understand the differences that matter.

The decision, ultimately, comes back to you: how you think, how you behave under uncertainty, and what kind of investing life you want to build.

What a broker actually does

Because retail investors cannot trade directly on the ASX, a broker serves as the licensed intermediary who executes your buy and sell orders. But modern brokers do more than route trades. They hold or record the ownership of your shares, provide tax statements, show portfolio performance, and increasingly, offer access to international markets and basic research tools. The shift from traditional advisory brokerage to online, self-directed platforms has changed the nature of investing. The investor has moved into the driver’s seat.

In Australia, the first major distinction between brokers is not brand or price, but how your shares are registered. Many of the brokers that Australian investors know well, such as CommSec, CMC Invest, SelfWealth, Stake, Bell Direct and Pearler, are CHESS-sponsored. This means the shares are registered under your own Holder Identification Number (HIN) on the ASX. Ownership is direct and visible. If you later change brokers, your holdings move with you, cleanly and transparently.

Other brokers rely on a custodial model, where shares are held in a pooled structure on your behalf. Superhero’s standard ASX offering is a well-known example. Custody is not second-rate; for many investors it provides lower trading costs or features like small, regular investing amounts. But it is a different structure with different implications for portability and record-keeping. For new investors, it often comes down to whether you value clarity of personal ownership or simplicity and low cost.

Full-service and online discount brokers

The older model of the full-service stockbroker still exists: firms and advisers who construct portfolios, provide ongoing recommendations, and charge accordingly. For high-net-worth investors who prefer delegation, this remains a legitimate route.

For most Australians, though, the practical reality is online discount brokers – platforms built around execution and autonomy. Here, distinctions are more philosophical than functional. CommSec and NABtrade appeal to those who like familiarity and bank integration. CMC Invest caters to investors who value global markets, advanced tools and tighter pricing. SelfWealth appeals to those who prefer predictable, flat-fee brokerage. Stake has built a reputation for simplicity and for making US markets accessible. Pearler is engineered specifically for long-term investing discipline, with automated contributions designed to encourage consistency. Bell Direct suits those who enjoy market research and insight tools. Interactive Brokers excels among those who trade actively across multiple markets. Superhero remains attractive as a low-cost, low-friction entry point for first-time investors.

Each platform embodies a view of what investing should feel like.

The questions to ask before choosing an online broker

The best way to choose a broker is not to compare fees in isolation, but to consider your own behaviour. The investor who trades frequently needs very different infrastructure than the investor who intends to buy ETFs monthly and rarely adjust positions. In practice, most people begin with one intention and discover their true investing personality only after they begin. The key is to choose a broker that will not work against that emerging identity.

The first question is how often you expect to trade. Regular trading magnifies the importance of execution cost and speed; occasional investing places more importance on clarity, automation and reporting. The second question is whether you want direct name-on-register ownership via CHESS or whether the reduced cost and convenience of a custodial arrangement is acceptable. A third is whether you intend to invest overseas, because foreign exchange pricing, not brokerage, becomes the real differentiator. A fourth is whether you want to automate contributions or set reminders for yourself. A fifth is whether you rely on research and market context when deciding. And finally, there is the matter of convenience: some investors simply like the feeling of having everything within their banking ecosystem, while others find it liberating to separate investing from day-to-day finances.

These are personal preferences. There is no universal right answer. There is only the answer that best supports your natural tendencies.

Do brokers really make a difference?

A broker cannot improve the performance of the investments you choose. The return of a share or ETF is the same no matter where you bought it. However, a broker can make it easier or harder to behave in a way that preserves your returns. A good broker lowers friction, reduces unnecessary cost, and provides a psychological environment in which you are less tempted to trade impulsively. It keeps your investing life orderly. A poor fit makes everything harder: tax time is a struggle, depositing funds feels like a chore, and the whole experience begins to feel chaotic.

Choosing a broker is partly about cost – but cost is not only brokerage. Foreign exchange spreads, account handling, reporting, and time spent managing complexity all accumulate. Over years, the difference between a broker that suits you and one that subtly works against you can be measured not just in dollars, but in confidence.

Should you just use the broker connected with your bank?

Starting with your bank’s broker is common and entirely reasonable. CommSec and NABtrade are trusted, established platforms, and for many new investors, familiarity is calming. But as your investing habits become clearer, you may find that a specialist broker better aligns with your preferences: lower fees, easier automation, broader international access, or simply a cleaner experience. Switching is not difficult, particularly if your holdings sit on your own HIN.

Your first broker does not have to be your last. But the first one should make it easy to begin.

The bottom line

Choosing a broker is not a technical decision. It is a behavioural one. The best broker is the one that supports the kind of investor you are becoming – not the one that promises the lowest headline fee or the most impressive dashboard. A good broker makes investing feel clear. It reduces noise. It reinforces discipline. It keeps you invested when the world feels uncertain.

Over time, that is where the real return lies.